Publications (2010)

Anti-Poverty Policies and Anti-Poor Philosophies

Published in: Journal of Business and Economics Vol 2 Number 2 July-December 2010
In this paper, the many policies, philosophies, and theories which claim  to help the poor, but actually hurt them are discussed. The most prominent recent example is that of the SAP’s. According to an independent evaluation by Mr. Fantu Cheru (2001), the Structural Adjustment Programs (SAP’s) of the  IMF  and  the  World  Bank  designed  to  generate  growth  and  alleviate poverty have had the opposite effect.

 “The Rise and Fall of the Market Economy

Published in: Review of Islamic Economics, Vol. 14, No. 2, 2010, pp. 123–155
Abstract: The core economic functions of production and distribution of goods can be handled by many different methods. After the fall of communism, the market mechanism has become nearly universal. Conventional economic theories argue that this is natural, because it is the best and the most efficient method for organizing economic affairs in a society. This paper, based on the analysis of Polanyi (1944) and Klein (2008) argues that the opposite is true. Market mechanisms conflict with natural mechanisms for production and exchange in traditional societies. Unregulated markets cause tremendous damage, as can be witnessed today in terms of countless economic crises, wars, environmental destruction, as well as damage to social networks. Because of this damage, market societies can only be maintained by force, as well as disinformation. To resolve crises on myriad fronts caused by the unregulated market, it is the need of the hour to find viable alternatives.

Variance Estimates and Model Selection,” with Sidika Basci & Arzdar Kiraci

Published in: International Econometrics Review, vol 2. no 2, 2010
Abstract: The large majority of the criteria for model selection are functions of the usual variance estimate for a regression model. The validity of the usual variance estimate depends on some assumptions, most critically the validity of the model being estimated. This is often violated in model selection contexts, where model search takes place over invalid models.
A  cross  validated  variance  estimate  is  more  robust  to  specification  errors  (see,  for example, Efron, 1983). We consider the effects of replacing the usual variance estimate by a cross validated variance estimate, namely, the Prediction Sum of Squares (PRESS) in the  functions  of  several  model  selection  criteria.  Such  replacements  improve  the probability of finding the true model, at least in large samples.
Keywords:  Autoregressive Process, Lag Order Determination, Model Selection
Criteria, Cross Validation
JEL Classifications: C13, C15, C22, C52

Tests for Structural Change, Homogeneity, and Aggregation” (joint with Esfandiar Maasoumi & Mumtaz Ahmed).

Published in: Economic Modelling, 2010.
Abstract: Structural change can be considered by breaking up a sample into subsets and asking if these can be aggregated or pooled. Strategies for constructing tests for aggregation and structural change in this setting have not received sufficient attention in the literature. Our methodology for testing generalizes to multiple regimes a discussion of Pesaran et al. (1985) for the case of two regimes. This treatment permits a unified approach to a large number of testing problems discussed separately in the literature, as special cases or as parts of a test of homogeneity. We also provide a simple alternative to much more complex testing strategies currently being researched and developed in testing for structural change.
Keywords: Structural change, Aggregation

Islamic Economics: A Survey of the Literature,” Religion and Development Research Programme, Working Paper 22, Univ. of Birmingham, 2008,

Published in: Islamic Studies, IRI Journal, 2010
Abstract: A central thesis of this paper is that social science is the study of human experience, and hence is strongly conditioned by history. Modern Western political, economic and social structures have emerged as a consequence of the repudiation of religion associated with the Enlightenment and are based on secular principles. Many of these are discordant with Islamic principles and cannot be adapted to an Islamic society.  Around the middle of the twentieth century Muslim societies successively achieved freedom from colonial rule where-after they sought to construct their collective institutions in conformity with the teachings of Islam. The development of Islamic economics is part of this process of gaining freedom from the stranglehold of Western colonial institutions. This paper is a survey of the literature on Islamic economics which focuses on the contrasts between Western economic theories and Islamic approaches to the organization of economic affairs.

Causal Relations via Econometrics

Published in: International Econometrics Review, vol 2, no. 1, 2010.
Abstract: Applied econometric work takes a superficial approach to causality. Understanding economic affairs, making good policy decisions, and progress in the economic discipline depend on our ability to infer causal relations from data. We review the dominant approaches to causality in econometrics, and suggest why they fail to give good results. We feel the problem cannot be solved by traditional tools, and requires some out-of-the-box thinking. Potentially promising approaches to solutions are discussed.
Keywords: Causality, Regression, Exogeneity, Hendry methodology, Natural experiments
JEL Classifications: C, C5, C59